MP's arrest another obstacle on Gillard's road to re election

The arrest yesterday of former Labor MP Craig Thomson on 150 fraud charges points starkly to the long, hard haul Prime Minister Julia Gillard has mapped out with her decision to hold the next election in eight months.

Thomson, who was suspended from the party last April after allegations that he had spent Health Services Union fund on prostitutes and entertaining during his time as national secretary, has remained a key vote for the Government on the crossbenches.

He already faces civil action in the Federal Court and a criminal conviction would force Thomson out of Parliament, leaving a dangerous hole in the minority Government's already wafer-thin bloc.

Even if, as is likely, the case has not been concluded before the September 14 poll, Thomson's arrest has given further fuel to Opposition leader Tony Abbott's unrelenting attack on Gillard's probity and judgment.

"The Thomson matter isn't just about what Craig Thomson may or may not have done, what he did or didn't do," Abbott said. "It's always been about the judgment of the Prime Minister, who was running a protection racket for Craig Thomson for months and years."

Thomson will be a small sideline in what will be Australia's longest election campaign. But added to other pitfalls - some existing, some almost certainly to emerge in the coming months - his arrest will be used in a greater strategy of undermining trust in the Prime Minister.

Gillard has gambled that eight months will give her time to deal with the more brutal side of politics while regaining the agenda from Abbott, who last year successfully buried most of Labor's major policy initiatives beneath a series of sensational accusations and revelations.

Her argument is that a long lead time will provide business, bureaucracy, institutions and consumers with stability, a view accepted by business leaders who normally face months of uncertainty in their planning.

Gillard said the next eight months would allow the business of government to continue without the constant speculation about dates that increasingly dominates the political landscape in an election year. If nothing else, it will prevent the last-minute storm that drowns government policy.

The Prime Minister has also been busy denying that she has actually launched the campaign.

"Relax, relax, relax," she told Channel Nine's Today Show. "I made it perfectly clear [on Wednesday] what I wanted to do was cut out all of the silly nonsense that goes with election date speculation."

Commentary on her decision has centred on three main themes: a strategy designed to shore up her leadership and block any challenge from ousted predecessor Kevin Rudd; to take charge of the agenda and focus on policy; and put the heat on Abbott to detail policies and their costings.

Gillard yesterday dismissed the Rudd speculation: "Whatever the flibbertigibbet politics that goes on, nothing about this decision is in any way related to [Rudd]. We decided that last year."

The other priorities are not in doubt. Even with improving polls - the latest Morgan poll this week put Labor within 1 per cent of the Opposition - Gillard faces a very hard sell.

While the unpopularity of Queensland's Liberal National Government has improved her chances there, she still trails woefully in New South Wales - where Sydney's western suburbs alone could hurl her from power.

Gillard will be hammering economic management, jobs, education and the new national disability insurance scheme, but will face hard questioning on how she intends to pay for major initiatives. Treasurer Wayne Swan has dodged the issue, saying all will be revealed in the May Budget.

Gillard will need to convince voters that despite large job losses, a slowing economy, the winding down of the mining boom and cost of living pressures, suburban Australia is in pretty good shape.

She has real signs to point to: a strengthening house market, relatively low unemployment, low inflation and record low interest rates among them.

The latest St George Bank-Melbourne Institute household survey yesterday reported that two-thirds of the nation's households have started the year in sound financial shape.

But the Coalition, and some within Labor ranks, believe Gillard has blown it, allowing the Opposition time to push its policies while hewing away at the Government.

It says it will not be pressured into an early or hurried release of its policy costings and will take full advantage of what it expects will develop into a long, unpopular campaign that will climax around the time of the AFL and NRL finals.

Abbott will also be attacking Gillard's personal and political judgment, trying to swing the election around trust.

"My pledge to you is that I won't say one thing before an election and do the opposite afterwards because fibbing your way into office is what's brought our public life into disrepute," he told the National Press Club yesterday.